An 'Unsustainable' Position: Obama Dodges Keystone in SOTU Speech

Jan 29 2014, 3:10pm CST | by

An 'Unsustainable' Position: Obama Dodges Keystone in SOTU Speech


This is a guest post by Chip Register, managing director of Sapient Global Markets

President Obama’s fifth State of the Union address is already being assessed as something of a non-event, well-delivered but lacking much new thinking. For those interested in energy policy, it was a complete disappointment. The President largely stayed away from any discussion of energy and environmental issues during his sixty-five minute speech. And in the three minutes he did mention energy, he seemed to contradict himself and his own positions.

On the one hand, the President said “climate change is a fact” and that we must answer the call to leave our children a cleaner planet. Yet, on the other hand, the President extolled the virtues of the country’s rising energy independence and booming natural gas production, which is almost exclusively a result of hydraulic fracturing, or “fracking.”

So, where is the mind of the “greenest President in history” on this important topic?

That’s simple. Right now it is focused on places like Alaska, Louisiana, Montana, South Dakota, West Virginia and other energy-sensitive states where Senate Democrats are in danger of losing their seats. The President knows that in order to save the Senate, and his legacy, he must go against the majority of his party to save a critical minority of Senators who are standing for reelection in states where Keystone and energy means jobs, money, and most importantly, votes. If his party fails to hold the Senate, politics in Washington will change violently and not in a good way for a President seeking to press his agenda in the last three years of his second term, historically an uphill fight in the best of cases.

As of now, the Republican chances are looking good. A new Gallup poll released on Monday showed that eight of the Senate battleground states – Wyoming, West Virginia, Utah, Idaho, Oklahoma, Montana, Alaska and Arkansas – are also in the top ten when it comes to their dislike of Obama. Indeed, just over one-in-five Wyoming residents approved of Obama, while his approval in Montana, Alaska and Arkansas ranged from just 33% to 35%.” He fares only slightly better in Louisiana at 40% and North Carolina at 43%.

The point is the President’s unpopularity in these key states could mortally wound Democratic incumbents. Latest polling shows Democrats struggling across the board. Though it is early days, in North Carolina, Democrat Kay Hagan trails both of her leading Republican rivals by as much as 7 points, according to a poll conducted by Rasmussen Reports last week.

But approving Keystone shouldn’t be a huge leap if the President believes pragmatism should trump ideology. Rejecting the pipeline permits wouldn’t serve any larger environmental benefit (it is now really a NIMBY argument) as it would mean that instead of the oil flowing down to the US from Canada, it would simply just flow to Asia with the construction of the alternative Gateway Pipeline.

As such, many political observers believe his best option at this point is likely to give in on Keystone. If anything it would be a small gift to the right, not a total capitulation.  And, it would also not only give a boost to the embattled Democratic Senators fighting for their seats in energy states, but would be a popular with another of his most powerful constituencies, labor unions, which support the pipeline’s construction.

But when might this happen? Well, it could be as early as next week as we come up on next big political event: The February 7th debt limit deadline. Republicans fared poorly, to say the least, in the 2013 government shutdown. They know it, and Obama really knows it, so compromise here is in everyone’s interest. Keystone and a few other lightweight gives would be a perfect compromise for all sides. Obama would get his bill, placate big labor and provide a valuable talking point to Senate candidates in Red States about how the Democratic tent is big enough for all. Meanwhile, the Republicans get their pipeline and avoid another embarrassing family feud.

Should they not be able to stitch this together in time for the February 7th deadline, watchers say to look for the pivot before the summer when the campaigns move into full swing.

Earlier this month, The Sierra Club chided the President in a letter to the White House, complaining that his “all of the above” strategy is a “compromise that future generations can’t afford… It increases environmental injustice while it locks in the extraction of fossil fuels that will inevitably lead to a catastrophic climate future.” They closed their letter by pleading: “In the coming months your administration will be making key decisions regarding fossil fuel development — including the Keystone XL pipeline, fracking on public lands, and drilling in the Arctic ocean — that will either set us on a path to achieve the clean energy future we all envision or will significantly exacerbate the problem of carbon pollution. We urge you to make climate impacts and emission increases critical considerations in each of these decisions.”

Last night’s speech hints at his response. More important forces are at play than permitting a 1,200 mile pipeline that has many undeniable benefits and poses few problems for anyone other than a single interest group buried deep in his support base. The political math just isn’t stacking up well for Keystone opponents.

Forbes contributor Chip Register is the managing director of Sapient Global Markets and e.v.p. of Sapient Corporation. Prior to joining Sapient, Register built and managed several merchant trading businesses for Louis Dreyfus Energy Services (LDES), one of the largest privately-held commodity traders in the world. Prior to LDES, he managed Essent Energy Trading, the merchant subsidiary of the largest Dutch utility. Register spent ten years before Essent trading commodities and foreign exchange. He was instrumental in the development of trading businesses for Weyerhaeuser, CIBC World Markets and UBS. 

Source: Forbes Business

 
 

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